Commissioner Donelon encourages insurance policy spring cleaning
By: Jim Donelon
In these uncertain financial times, knowledge is your best protection, especially when it comes to insurance. According to the National Association of Insurance Commissioners,
a vast majority of Americans believe they are smart about insurance, however, a deeper look at the issue tells a different story. In a 10-question IQ quiz to test the nation’s insurance knowledge, on average, Americans flunked the test with only a 40 percent score.
“By arming yourself with the facts and improving your insurance IQ, you can make sure you are adequately protected, without paying more than you should for that coverage,” said Louisiana Insurance Commissioner Jim Donelon. “The Louisiana Department of Insurance offers these tips on how you may be able to cut back on the cost of your insurance.”
•Several factors can affect your auto insurance premiums. Some of these to keep in mind include: vehicle make and model, vehicle safety features, your age, gender, marital status, income, annual mileage, mileage to work, coverage limits, claim history and territory.
•Ask your insurance provider about discounts such as a multi-car discount, good grade discounts for students under 25 years of age, and mature driver discounts for consumers between 50 and 65 years of age. Teens can often receive a discount for completing a driver’s education course and many companies offer discounts to anyone who completes a defensive driving course.
•Check with your producer about the pros and cons of higher deductibles. With a higher deductible you will be responsible for more of the cost to repair damages caused in an accident, but you will pay a lower premium.
•Maintain a good driving record. Some companies offer discounts to drivers who have three or more years without an accident or moving violation.
•Maintain a good credit history. Your credit score can have a direct impact on auto premiums for both new policies and at renewal.
•Ask your producer if your company offers discounts for equipping your car with safety features, such as anti-theft devices, anti-lock brakes and automatic seat belts.
•Not every company charges the same rates for coverage. Shop around and compare rates from at least three different companies for the best coverage at the best price.
•Some companies are beginning to charge for auto insurance based on various criteria such as miles driven, speed and other driving habits. These kinds of policies require a monitoring device to be installed in the vehicle. If you drive minimal miles each month and have good driving habits, you should look into this type of policy.
•Install protective devices — such as a burglar alarm system, smoke detectors and deadbolt locks. Notify your insurance producer if you have these devices or have recently installed them.
•Consider consolidating your homeowners and auto insurance policies with the same insurer, as you might be eligible for a multiple-policy discount. However, be careful of switching your homeowners insurance if you have been with your company for three years or more, as by Louisiana law your company cannot cancel you or change your coverage or premium without due cause.
•Again, maintain a good credit history. Many insurance companies consider credit history when determining how much to charge for homeowners insurance for new policies and at renewal.
•Proper maintenance and upkeep of your home can also save you money in the long-run.
•You can receive insurance premium discounts if you build or retrofit your home to comply with the Louisiana State Uniform Construction Code, or install mitigation improvements demonstrated to reduce the amount of loss from a windstorm or hurricane.
Property and Casualty Tax Exclusions, Rebates, Credits and Deductions
•There are exclusions from state sales and use tax for homeowners who purchase storm shutter devices for hurricane protection.
•Property owners are entitled to a state tax rebate whether you owe taxes or not - if you were charged the Louisiana Citizens Property Insurance Corporation assessment on your 2008 policy. And, if you have not submitted your rebate for 2007, it’s not too late to do so.
•A one-time state tax credit is available effective July 1, 2008, for seven percent of the premiums you may have paid on your primary residence for homeowners, condominium owners, or tenant homeowners insurance. Any Citizens assessment must be subtracted from the total premium paid before applying the seven percent tax credit rate.
•You can also receive state tax deductions for voluntarily retrofitting your home to comply with the Louisiana State Uniform Construction Code.
•Property owners impacted by hurricanes Gustav or Ike can claim uncompensated damages that exceeded $100 with the Federal Hurricane Tax Deduction on their 2008 taxes.
•If you have a group policy with your employer, use the open enrollment period to find out if there are any provider options that may be less expensive than your current provider.
•Stay in-network when possible, making sure to get referrals and pre-certifications as required by your plan.
•Keep all receipts for medical services and expenses. In the event you exceed your deductibles, you might qualify for a tax deduction for out-of-pocket medical expenses.
•Maintain a healthy lifestyle. Some insurers take your lifestyle into consideration when determining premiums. You may be able to reduce the cost of coverage if you quit smoking, drive more safely and maintain a healthy weight.
•Stay healthy or get healthy. Insurance companies might review your health habits and will consider certain behaviors, like smoking or excessive drinking, when determining your premiums.
•Avoid risky behaviors. Dangerous hobbies, such as skydiving, hang-gliding or rock climbing, will likely cause higher insurance premiums. If you are an international traveler, your rates will be higher as well.
•Maintaining a good driving record may cause your life insurance company to give lower rates because you wouldn’t be considered as much of a risk for life insurance as would someone with a bad driving record. This varies company by company and is something to ask your life insurer about.
•Purchase life insurance at a young age when you are usually healthier and the rates will be more affordable.
To learn more, visit the Department of Insurance website, www.ldi.state.la.us. If you have any insurance questions or concerns, you can reach any of our consumer affairs divisions toll free at 1-800-259-5300.